Bankruptcy is not a decision that should be taken lightly. There are some taxing financial consequences involved and your financial freedom will be restricted for many years to come. This doesn’t suggest that declaring bankruptcy is the end of the world though. It should actually be regarded as the first step in securing a bright financial future for you and your family. Millions of individuals declare bankruptcy each year and most of them are able to buy homes, cars and obtain credit cards after they’re discharged. Further to this, understanding what life is like after you have declared bankruptcy will clearly give you insight into making better financial decisions in the future.
Generally speaking, once you have filed for bankruptcy, you give up control of your finances and assets to a Trustee in exchange for protection against litigation that might be taken by your creditors. Once the legal process has been completed, you’ll be undischarged for a specific period of time (in most cases three years) after which time you’ll become discharged, which indicates that the financial limitations you suffered during bankruptcy are lifted. Once discharged, your name will permanently appear on the public record (NPII) as a discharged bankrupt. What this article aspires to achieve is to give you an understanding of what happens after you declare bankruptcy and what options you’ll have after you become discharged.
You Can’t Leave The Country Without Permission
One of the limitations of declaring bankruptcy is that you cannot exit the country while you’re undischarged only if you seek permission from your Trustee. To do this, you’ll have to provide a lot of information regarding your destination, length of stay, contact numbers, and the reasons for your travel. It’s an offence to travel abroad without prior approval from your bankruptcy Trustee, and in most cases will increase the length of your undischarged bankruptcy to a minimum of five years as opposed to three.
You Will Be Offered Credit Immediately
One thing that surprises many discharged bankrupts is that they will immediately be offered credit by a variety of lenders. The reason behind this is that you won’t be able to declare bankruptcy again for a lengthy period of time, so lenders understand that they have a good chance of getting their money back if you secure a loan. In some situations, acquiring a loan and making timely repayments will help improve your credit score, which will assist you in the recovery process. But be warned, you don’t want to accept every offer thrown in your direction as some creditors are very dubious and include hidden fees and charges that can put you in debt again instantly. The trick is to rebuild your credit score progressively.
Buying A Home Is Definitely Possible
There’s a general misconception that when you file for bankruptcy, you will no longer have the ability to acquire credit for a home loan. This is definitely not the case. While bankruptcy will leave you with a poor credit history, you can still purchase a home if you manage to rebuild your credit within a couple of years, you pay all your bills in a timely manner, and you demonstrate a responsible use of credit. Naturally, you won’t have the capacity to obtain a mortgage straight after you’re discharged, so it’s very important to build your credit history intelligently before even envisioning securing a mortgage.
Check Your Credit Regularly
Most financial specialists recommend that discharged bankrupts should review their credit report around twice a year. After initially declaring bankruptcy though, it’s vital that you take a look at your credit report monthly for at least the first six months into your bankruptcy. Various creditors may still be requesting payments despite the fact that you are not required to make payments on any debts that were discharged in the bankruptcy process. So to steer clear of any further complications, it’s necessary that you keep an eye on your credit report to make sure that it’s accurate and up to date.
Though bankruptcy isn’t the most ideal situation to be in, it doesn’t mean that your financial future is permanently restrained. There are some serious financial constraints imposed on individuals that declare bankruptcy, but after they become discharged and slowly rebuild their credit history, they’re perfectly capable of securing a bright financial future. Acquiring a mortgage and other credit lines will be possible a few years after discharge if the recovery process is well-planned and executed. Thus, it’s critical that you seek professional advice from bankruptcy experts to assist you in the process, as bankruptcy is very complicated and there are many factors to have to be taken into consideration to ensure a smooth recovery process. If you’re thinking about filing for bankruptcy, talk with Gold Coast Bankruptcy Centre on 1300 795 575 or visit their website for more information: www.goldcoastbankruptcycentre.com.au